LONDON MARKET OPEN: FTSE up on weak pound as Burberry, Rio Tinto sink

(Alliance News) - Stock market participants were looking for a positive end to the week, despite ...

Alliance News 16 July, 2021 | 8:57AM
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(Alliance News) - Stock market participants were looking for a positive end to the week, despite rising concerns about the persistence of the Covid-19 pandemic, with investors also awaiting inflation figures from the EU.

The FTSE 100 index was up 35.21 points, or 0.5%, at 7,047.23 early Friday. The mid-cap FTSE 250 index was up 77.90 points, or 0.4%, at 22,579.15. The AIM All-Share index was 0.1% higher at 1,222.40.

The Cboe UK 100 index was up 0.6% at 702.23. The Cboe 250 was 0.3% higher at 20,250.87, and the Cboe Small Companies was flat at 15,151.35.

In mainland Europe, the CAC 40 in Paris was up 0.4% while the DAX 30 in Frankfurt gained 0.3% early Friday.

The economic events calendar on Friday has eurozone inflation readings at 1000 BST and US retail sales print at 1330 BST.

In the UK, health bosses have asked staff to postpone holidays as the NHS came "under extreme pressure" due to a surge in coronavirus cases.

Staff at South Tyneside and Sunderland NHS Foundation Trust – dealing with one of the highest infection rates in the country – are seeing hospital cases doubling week-on-week. In an internal note to staff earlier this week, bosses said there were 80 Covid-19 patients receiving hospital treatment compared with just two exactly a month before.

On the LSE, Burberry was the worst performer among the blue-chips, down 2.6%. This was despite the luxury fashion house posting a strong start to its financial year, with sales now slightly ahead of pre-Covid levels in a sign that Burberry has re-emerged from the pandemic.

In the 13 weeks to June 26, Burberry's retail revenue jumped 86% year-on-year to GBP479 million from GBP257 million. At constant currency, the leap was 98%.

Comparable store sales were 90% higher than they were a year earlier, and up 1% from two years prior, before the onset of the pandemic. Burberry's first quarter lapped an easier annual comparative, a time when the virus had begun to take a firm grip on the luxury retail market.

Burberry also is still looking for a new CEO, with Marco Gobbetti set to depart for Italian fashion firm Salvatore Ferragamo at the end of the year.

The second worst performer was Just Eat Takeaway.com, down by 1.7%. The online food delivery marketplace agreed to acquire the Bistro.sk business in Slovakia from Ringier Axel Springer Media.

The enterprise value for the transaction is EUR50 million, with the transaction expected to close later in 2021. Following the closure of the deal, Bistro.sk will adopt the Just Eat Takeaway.com global brand identity and migrate to the company's European IT-platform.

Rio Tinto was the third-worst performer, down 1.5%, as it expects iron ore shipments to be at the low end of the 2021 guidance range due to Covid-19 disruptions, tie-in and ramp up of brownfield replacement mines, and management of cultural heritage.

The miner said Pilbara operations produced 152.3 million tonnes - with a Rio Tinto share of 126.9 million tonnes - in the first half of 2021, 5% lower than the first half of 2020 due to above-average rainfall, shutdowns to enable replacement mines to be tied in, processing plant availability, and cultural heritage management.

Last year, Rio Tinto destroyed a 46,000-year-old Aboriginal heritage site - the Juukan Gorge caves - to expand the Pilbara iron ore mine in Western Australia, attracting public outcry, regulatory scrutiny, and changes at the top of the company.

Mined copper and bauxite production, meanwhile, is expected to be at the low end of the guidance range in 2021 after mined copper from Kennecott and Escondida declined by 6% and 17%, respectively, in the first half of 2021. Bauxite production slipped to 27.3 tonnes from 28.4 tonnes year-on-year in the first six months of 2021.

Sales, marketing and support services firm DCC was in the green, with shares up 2.8%, as it traded "very well" in what it called the seasonally less significant first quarter of its current financial year, building on the strong performance recorded for the year that ended March 31.

Operating profit growth was well ahead of the prior year and modestly ahead of expectations, driven by "very strong" organic profit growth in DCC Healthcare and DCC Technology.

John Moloney will retire as chair and from the board following Friday's annual general meeting. Mark Breuer will succeed Moloney.

Among London mid-caps, HomeServe was up 2.3%, as its outlook for the full year remained in line with the guidance. The company said it continued to see strong growth in its North American Membership & HVAC business and the Home Experts unit is on track to reach profitability.

In UK Membership & HVAC, a transformation programme is under way, HomeServe noted, to create "a more diversified, efficient digital business", and return to stable growth.

The company's Continental European Membership & HVAC businesses, and its joint venture in Japan, continue to make good progress.

Gold was quoted at USD1,822.10 an ounce early Friday, slightly lower than USD1,824.33 on Thursday. Brent oil was trading at USD73.28 a barrel, down from USD74.22 late Thursday.

Sterling was quoted at USD1.3794 early Friday, falling from USD1.3855 at the London equities close on Thursday. The euro traded at USD1.1800 early Friday, soft from USD1.1814.

Against the yen, the dollar was broadly unchanged at JPY110.11 versus JPY110.00 late Thursday.

The Japanese Nikkei 225 index closed down 1.0%. In China, the Shanghai Composite closed down 0.7%, while the Hang Seng index in Hong Kong was up 0.3%. The S&P/ASX 200 in Sydney closed 0.2% higher.

"With US equities and bond yields lower yesterday most Asian bourses follow a little weaker today as the BoJ provides no great surprises," said Daiwa Capital Markets Analyst Chris Scicluna.

The Bank of Japan revised down its growth forecast for the current fiscal year and laid out details of its first green fund, announced last month.

The central bank kept its key monetary easing measures unchanged, and maintained its long-standing 2% inflation target, which remains far off despite years of efforts.

By Evelina Grecenko; evelinagrecenko@alliancenews.com

Copyright 2021 Alliance News Limited. All Rights Reserved.

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Securities Mentioned in Article

Security Name Price Change (%) Morningstar
Rating
Burberry Group PLC 1,824.00 GBX -1.11
DCC PLC 6,268.00 GBX -1.79 -
Homeserve PLC 921.50 GBX -3.31 -
Rio Tinto PLC 4,830.50 GBX -0.57
Just Eat Takeaway.com NV 5,640.00 GBX -3.90
Just Eat Takeaway.com NV 65.90 EUR -4.08

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